If the target permanent is an illegal target when Dinrova Horror’s ability tries to resolve, the ability won’t resolve and none of its effects will happen. No player will discard a card.

3/14/2017

If a player has no cards in their hand and Dinrova Horror returns a card to that player’s hand, the player must discard that card. They won’t have the opportunity to cast that card (or do anything else with it) before discarding it.

3/14/2017

A token permanent returned to a player’s hand isn’t a card and can’t be discarded. It will cease to exist when state-based actions are performed after the ability finishes resolving.